Figures released this morning showed that Chinese GDP grew 7.4% in the third quarter from a year earlier but it was the seventh consecutive quarter where growth has slowed. Although the economy has slowed during the quarter the month on month data saw a huge improvement. September’s monthly figures are what the market has focused on rather than the quarterly figures which has seen the Australian Dollar strengthen since the announcement.
As China is a huge key trading partner for Australia any growth for China typically strengthens the AUD against EUR, USD and GBP. There is a risk of a slowdown in the world’s second largest economy but for the meantime the growth has kept up the AUD. For the past 30 years China has grown at an average of 10% so I would be surprised to see China slow down too much as they still appear to have huge room for growth.
The problems that could negatively affect the appetite for the Australian Dollar include a new Euro zone crisis which would in turn hit imports and a big blow to China’s manufacturing base. It is inevitable that this will happen at some stage and therefore we could see a weakening of the Aussie in time to come but the question is when? If China reverts to its previous 30 years of growth we could be waiting a very very long time before the AUD weakens.
If you have a currency transfer to make and want to find out more about how to get the best exchange rates please contact me directly Tom Holian [email protected]